Global Insolvency: 2025-2026 Projections

Welcome to the second edition of the PwC Global Insolvency perspective - 2025 reflections and 2026 projections. In this review we are looking to provide insights on what has been happening in the insolvency world across 21 of the main territories in which we have a Performance and Restructuring presence.

2025 brought both challenges and opportunities for businesses, and our review underscores a key insight: size plays a crucial role in determining success or failure. We see two distinct groups emerging. The "haves"—larger companies—benefit from access to shareholders, debt, and capital markets, helping them steer clear of insolvency. New capital sources are emerging globally, with private credit providers boosting liquidity and offering more options for some. But smaller companies face tougher hurdles. Their access to liquidity is limited, and their value proposition is less defined. These "have nots" have been more prone to failure throughout 2025.

Chapter 1 Insolvency 2025 looking back

Insolvency rates

Insolvency rates across many of the territories have remained sluggishly high. There have been winners and losers but no substantial increases or reductions. This reflects the broader global economic conditions where the trends in terms of inflation, interest rates and economic growth have not substantially improved over the course of 2025. Virtually all territories (with the possible exception of the US) reported subdued consumer confidence which impacted the retail, hospitality and leisure sectors where discretionary spending is often key and can also lead to bigger ticket purchases (eg cars) on hold.

Legislation

A positive development throughout 2025 was the rush by many countries to introduce new legislation designed to improve existing insolvency laws, increase the insolvency and restructuring tools available to lenders, corporates and advisers and align existing domestic processes with global practices. It was encouraging to see the changes in India to the IBBI Regulations and IBBI (CIRP) Regulations which will hopefully achieve the stated aim of simplifying and enhancing statutory processes and aligning more closely with recognised international insolvency practices. Malaysia fast tracked the adoption of the United Nationsl Commission on International Trade Law (UNCITRAL) model law with its Cross-Border Insolvency Bill 2025. Nigeria enacted changes designed to introduce business rescue procedures such as administrations and CVAs as an alternative to the liquidation processes which were previously the only process available.

We ended the year with the news that China had begun consultation on amendments to the existing Bankruptcy Law which are designed to bridge the current gulf between out of court workouts and in court restructurings. Many practitioners are hoping this will increase the options that are currently available in China to deal with insolvent enterprises and enable them to effectively address overleveraged balance sheets and to continue to survive and thrive. Across Europe we await the enhancements to European wide legislation which seeks to harmonise insolvency laws across the EU. Local differences have often been the cause of friction particularly in respect of director duties, antecedent transactions and pre-packs which the revised legislation seeks to address.

Directive of the European Parliament and Council harmonising certain aspects of insolvency law

In December 2025, the EU's legislative bodies reached a consensus on a new Directive aimed at harmonising key aspects of insolvency law. This initiative seeks to ease market tensions caused by varying national regulations and establish shared standards for better efficiency, predictability, and recovery in cross-border scenarios. The Directive zeroes in on five pivotal areas:

Avoidance Actions: Setting baseline standards to reverse detrimental pre-insolvency transactions, such as preferences and undervalued deals, within specified periods, with clear exceptions and solutions.
BARIS-Enabled Asset Tracing: Empowering courts and authorities with direct access to national bank account registers and cross-border access through the BARIS (Bank Account Registers Interconnection System)system, ensuring timely and fair access to beneficial ownership and asset records.
EU-Wide Pre-Pack Going Concern Sales: Introducing a two-phase model with a confidential preparation phase led by a monitor, followed by a court or authority supervised liquidation sale.
Directors’ Duty to File: Mandating directors to commence proceedings within three months of recognising insolvency or having a reason to know, with limited options and accountability for any delays.

Creditors’ Committees: Standardising essential features, facilitating electronic participation, and safeguarding members with liability exemptions or insurance funded by the estate.

The European Parliament and Council are expected to formally approve the Directive in early 2026, with a 33-month period for EU Member States to implement it. BARIS obligations will take effect by the transposition deadline or by 10 July 2029, whichever is later.

This Directive aims to elevate the foundational standards for insolvency, enhancing predictability, recovery, and cross-border collaboration, while allowing Member States the flexibility to enforce stricter regulations.

Restructurings becoming more contentious

We have seen many restructurings (such as Selecta, Altice, Thames Water) becoming more contentious leading to an increase in costs (meaning less cash to fund the business), delays and in some cases such as Petrofac in the UK the insolvency of the company. Many Chapter 11 restructurings have been contested in the court by disgruntled creditor classes including Johnson and Johnson, Perdue Pharma, Spirit Airlines and ConvergeOne. There have been appeals on several Restructuring Plans in the UK and Judges seem to be asking companies to ensure what is being proposed has greater fairness and equity than was the case in some of the earlier cases. It remains to be seen whether these issues will be seen by corporates, lenders and their advisers as being so significant as to warrant a return to the use of insolvency processes to deliver a solution in a more certain, timely and cost-effective manner.

Some of the newer tools for restructuring, such as the UK Restructuring Plan and Dutch WHOA, have shifted focus from technical compliance to a more principled, fairness‑driven phase. Read more about this and the increasing traction of US-style liability management exercises across Europe in our dedicated thought piece here

Credit insurance

The lack of large-scale insolvencies across the globe was reflected in the global credit insurance market. The largest insurers showed continued strong operating results despite the normalisation of claim levels post Covid and prudent provisioning. Loss ratios (claims v premiums) remained below 55% on average which is considered a positive yardstick. Credit limit approval rates remained at an average of 74%, with North America performing strongly at 84%, APAC at 79%, EMEA at 71% and Latin America at 70%¹. The Technology sector saw an increase in approval rates during the year due to advances in AI and Cloud Computing but sectors such as construction, automotive, food and drink, agriculture, retail and manufacturing all saw a dip compared to 2024. In the last quarter claim numbers have risen to historic norms but with increased severity, leading to more scrutiny from underwriters. The credit insurers we have spoken to believe insolvencies are predicted to increase in 2026, driven by sluggish economic growth, geopolitical instability and interconnected risks. Export reliant economies are expected to be most at risk with the largest increases expected from the US and China.

The trade credit environment is changing with protectionist policies and deglobalisation increasing the likelihood that trade credit insurance losses will rise in the second half of 2026, when slower trade growth and rising insolvencies could test underwriting resilience.

Chapter 2 Territory insights on Insolvency trends

Understand a local perspective by exploring our territory insights on Insolvency trends.

Chapter 3 Sector themes

Geopolitical, trade and macro-economic issues have dominated the headlines in many territories however, putting those significant drivers to one side we have also seen many sector specific issues that have driven insolvency and restructuring activity throughout 2025. Our cross‑market analysis reveals a consistent pattern: in virtually every jurisdiction, manufacturing, construction, retail and hospitality have been under sustained pressure in 2025 and this pressure is expected to continue throughout 2026.

The automotive sector faced significant challenges in many of our territories. Many OEMs are facing the proverbial perfect storm of slow volume growth and intense competition from Chinese OEMs, leading to significant overcapacity. The challenges have cascaded throughout the automotive supply chain where in the UK there were additional pressures following the fall-out from the JLR cyber attack. A consequence of the changing fortunes of OEMs is that many have been reassessing their global footprint and in particular their JV arrangements in China. Some of the largest failures in 2025 were in the automotive space, First Brands Chapter 11 occupied many of the headlines towards the end of the year and in the early part of the year Marelli was navigating its Chapter 11 process.

Read more insolvency insights on the automotive sector.

The global real estate and construction sector faced a fundamentally more challenging environment in 2025 that went beyond a traditional temporary cyclical downturn. Having benefited from a prolonged period of low-cost capital, asset inflation and investment appeal, the sector is adjusting to higher-for-longer interest rates, persistent construction cost inflation, resource and capability constraints and increased regulatory intervention. This transition is increasingly manifesting itself in formal insolvency processes, lender led restructurings and distressed asset disposals particularly where refinancing risk, cost overruns and regulatory liabilities converge. The fall out in the Chinese real estate market continued with the insolvencies and high profile restructurings of Country Garden, China South City and Xinyuan however pressure was seen in the US with the Chapter 11 of Tilson and in the UK with the collapse of the Ardmore Construction Group.

Read more insolvency insights on the real estate sector.

The forestry, paper and packaging industry is navigating a period of financial strain as climate change, resource limitations and talent shortages have created some unique pressure points. Rising trade tensions, evolving regulations including the EU Deforestation Regulations are adding to compliance costs and the uncertainty CEOs in this market are facing.

Read more insolvency insights on the forestry sector.

The global mining, chemicals and oil & gas sectors entered 2025 at an inflexion point. Energy security concerns, decarbonisation pressures and rapid digital transformation are reshaping business models, capital allocation and risk profiles even though hydrocarbons remain central to global energy supply and industrial value chains. These structural shifts, when added to higher interest rates, ongoing capex requirements, outdated and inefficient facilities have driven elevated distress particularly amongst leveraged exploration and production players. Oilfield service providers faced particular pressures from delayed projects, cost overruns and tighter lending conditions. These are also driving increases in JV partner contractual disputes which has led to a number of insolvencies including Petrofac in the UK.

Read more insolency insighs on oil & gas and mining sectors.

Chapter 4 Explore the sector themes by territory

Chapter 5 Case studies

FTX Digital Markets – global collaboration at its best

The downfall of FTX marked one of the most intricate cross-border insolvencies in recent memory. As the third largest cryptocurrency exchange globally, FTX's liquidation in the Bahamas involved over 45,000 creditors, with claims exceeding $1 billion being settled with interest in less than three years. This remarkable result was made possible by an unprecedented global settlement agreement, harmonising the Bahamian insolvency process (UK common law) with the US Chapter 11 bankruptcy process. By combining the strengths of both systems, we facilitated asset recovery and claim settlements.

Achieving this outcome required a diverse, cross-functional team skilled in cross-border insolvency, asset recovery, forensics, data, technology, and cryptocurrency. Leveraging advanced technologies and AI, our innovative new methods were used to adjudicate and settle claims across 150 regions

The FTX Digital case exemplifies how our global network can unite to deliver successful outcomes. This effort was celebrated at the Turnaround Restructuring & Insolvency Awards, where it won accolades for cross-border insolvency of the year and best use of technology.

Lehman Brothers - a pivotal year

October 2025 marked a major milestone in the winding down of Lehman Brothers' UK operations, as the High Court approved a key step in concluding a 17-year insolvency process. Once the world’s fourth largest investment bank, Lehman Brothers' collapse led to one of the most complex and successful cross-border insolvencies in history. This process has seen numerous legal challenges and scrutiny, including litigation in the High Court, over ten cases before the Court of Appeal, and six hearings at the Supreme Court. These cases have set new precedents in areas such as cross-border claims, the priority of subordinated claims, the definition and treatment of client money, and the close-out and valuation of derivatives.

The lessons from the Lehman administration have reshaped the legislative and regulatory framework for dealing with failing financial institutions, particularly where speed, market stability and protection of client assets are paramount. Reforms influenced by these events include amongst others: (i) new resolution and intervention powers in the UK, (ii) recovery and resolution planning (“living wills”), (iii) a specialist insolvency regime for investment banks and (iv) strengthening client asset protections.

Throughout the Lehman UK administrations, significant payments have been made:

£17.7 billion to unsecured creditors, including full statutory interest, exceeding 100p in £1.
£2.2 billion to the holder of subordinated debt, covering principal and statutory interest.
£552 million distributed as equity to group shareholders.
£23 billion in custodied securities, investments, and associated cash returned to clients.

Over 2,000 of our partners and staff from 17 business areas have been instrumental in overseeing this insolvency process, with more than 500 staff mobilised in the first week.

Mr Justice Hildyard remarked on the administration's "remarkeble success," noting its uniqueness and the "seminal moment" of the LBIE administration's closure. This achievement marks a significant milestone in one of the most complex and successful insolvencies in UK corporate history, closing a pivotal chapter in resolving the most high-profile collapse of the 2008 global financial crisis.

Chapter 6 Conclusion

Insolvency levels have mainly stayed at the elevated levels seen since the end of the Covid pandemic during 2025 with smaller businesses feeling much of the pain. Across many territories subdued consumer confidence, stubborn inflation and interest rates are impacting spending decisions for both consumers and businesses.

The level of cooperation from lenders to some of the larger situations is becoming more challenged and whilst “creditor on creditor violence” helps to occupy the stage at many restructuring conferences there is a concern that some of the focus would be better spent on addressing the underlying business issues.

In the PwC 2026 Global CEO Survey², when asked about the year ahead, CEOs see a world beset by challenges. They’ve grown significantly less confident about the short-term growth outlook for their companies and more worried about a range of threats, including macroeconomic volatility, cyber risk, and geopolitical conflict.

The PwC 2026 Global CEO Survey also brought into sharp focus uncertainty relating to tariffs being a new consideration as governments recalibrate tax policy to support national interests, secure supply chains, and address fiscal shortfalls. Our findings indicate one in five CEOs (20%) say their company is highly or extremely exposed to the risk of a significant financial loss from tariffs over the next 12 months. Trepidation varies greatly by geography, ranging from just 6% on average across Middle Eastern countries to 28% on the Chinese Mainland, 30% in Turkey, and 35% in Mexico. Among US CEOs, 22% say their company is highly or extremely exposed to tariffs, which is close to the global average

As the AI arms race demands increasing amounts of capital to sustain the pace of development, there is a concern that traditional industries will struggle to secure the funding needed to sustain their businesses or to fund the transition into the new world. Insights from our survey² reflect that most CEOs say their companies aren’t yet seeing a financial return from investments in AI. Although close to a third (30%) report increased revenue from AI in the last 12 months and a quarter (26%) are seeing lower costs, more than half (56%) say they’ve realised neither revenue nor cost benefits.

In terms of what this will mean for the global insolvency market these challenges mean it is likely that domestic and cross border insolvencies will remain at elevated levels in 2026 and creditors and shareholders will need the support of deeply credentialed restructuring and insolvency advisers to help maximise recoveries. The gap between the “haves” and the “have nots” in the corporate world is likely to remain, with further insolvencies in the smaller end of the market but also increasing risks to medium and larger enterprises.

^Sources

^{1. AON Q3 2025: Global Insurance Market Overview.}

^{2. PwC Global 2026 CEO survey.}

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About the author(s)

David Kelly

Performance and Restructuring Partner, UK Head of Insolvency, PwC United Kingdom

David is a partner in the London Performance and Restructuring Team where he helps to support shareholders, management teams, lenders, bondholders and government clients to act rapidly and preserve value in financially stressed scenarios.

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Global Insolvency: 2025 Reflections and 2026 Projections